Housing Co-ops in BC: How Buying a Co-op Share Differs From Buying a Condo

A housing co-op can look just like a condo building, but buying into one works differently. If you are weighing a co-op against a condo, here is how co-ops work in BC: non-profit and equity co-ops, what you own when you buy a co-op share, and how approval, monthly charges, financing, taxes and resale compare, plus how to apply to a non-profit co-op.

The short version

Two kinds of housing co-op

A housing co-op in BC is usually a cooperative association under the Cooperative Association Act. As the BC Law Institute explains, members don't own their units: they own a share in the co-op and are assigned a unit to live in. Metro Vancouver notes that most co-ops in the region and the province are non-profit rental co-ops, and several use an equity model.

• Non-profit co-ops. Under section 173 of the Act, a co-op whose memorandum adopts the non-profit rule can't pay out its property to members, beyond refunding what they paid in, and it can't undo that rule. Its membership shares have a fixed par value: you get back what you paid, not a share of any rise in value.
• Equity co-ops. Members can profit when they sell their shares and may borrow against them, the BC Law Institute says. Some equity buildings are cooperative associations; others are companies under the Business Corporations Act whose shareholders have the right to occupy a suite.

The Co-operative Housing Federation of BC (CHF BC) marks equity co-ops in its online directory.

What you own when you buy co-op shares

In an equity co-op, you buy the seller's shares, and with them the right to occupy a particular unit under an occupancy agreement with the co-op. Your name doesn't go on the land title: the co-op or company holds the property, whether it owns the land or leases it. In a strata, each strata lot has its own title; I explain that side in Freehold or Strata?

• Different law. Stratas run under the Strata Property Act. A co-op follows the Cooperative Association Act and its own rules; a company follows the Business Corporations Act and its articles.
• Different documents. Strata tools such as the Form B information certificate and depreciation reports don't apply. Ask instead for the rules or articles, the occupancy agreement, the latest financial statements and budget, and recent meeting minutes.
• Different pricing. In an equity co-op, you negotiate the price with the seller. In a non-profit co-op, the co-op sets the share price.

Approval, rules and monthly charges

A co-op is a membership, so you need to be accepted. Under the Cooperative Association Act, members are admitted according to the co-op's rules, and a company's articles can restrict who may buy its shares. Vancity's terms for its co-op loan note that the contract of sale and the loan may need the co-op board's approval. Ask how approval works and how long it takes, and make your offer subject to it; see Subject Clauses in BC.

• Rules. The rules and occupancy agreement can limit renting out your unit, alterations and long absences. Some co-ops are seniors-only, and joint memberships, such as for a couple, are allowed only if the rules provide for them.
• Monthly charges. Your housing charge pays your share of the co-op's costs, such as property taxes, insurance, maintenance, reserves and any mortgage on the building. Members elect the board that runs the co-op.
• Land leases. Some co-ops sit on leased land. If yours does, find out when the lease ends; see how leasehold homes work.

Financing a co-op purchase

With a co-op, the lender's security is your shares, not the property. Vancity's co-op home loan, for example, shows how that changes the terms:

• Borrowing limit. It lends up to 65% of the value, 50% on the part above a set amount, and only up to a maximum property value. On a $500,000 unit, as an example, the most it would lend is $325,000, so you would need at least $175,000 of your own.
• Amortization. Up to 25 years or the time on the occupancy agreement.
• Eligible co-ops. The co-op must be a company under the Business Corporations Act; a housing cooperative under the Cooperative Association Act doesn't qualify for that loan.

Ask lenders early whether they finance shares in that co-op, and get pre-approved before you make an offer. Registered savings can help: the Canada Revenue Agency says a co-op share is a qualifying home for the First Home Savings Account (FHSA) and the Home Buyers' Plan (RRSP withdrawals) if it gives you an equity interest in your unit, but not if it only gives you a right to tenancy.

Property transfer tax and the home owner grant

Property transfer tax is charged when a transfer is registered at the Land Title Office. Buying co-op shares usually involves no such registration, because the co-op or company stays on title. A registered lease longer than 30 years can be taxable, so have your lawyer or notary confirm how your purchase is treated.

The co-op or company pays the property taxes and recovers them through monthly charges. Under the Province's multiple home owner grant, it can apply for the grant each year for eligible members or shareholders and must pass the benefit on. You still need to meet the usual qualifications, other than being the registered owner.

Selling later

In an equity co-op, your buyer will need the board's approval and a lender willing to finance the shares, which can slow a sale. Before you buy, ask how long recent sales took and which lenders financed them; the time left on any land lease or occupancy agreement matters to the next buyer's lender too.

In a non-profit co-op, there is nothing to sell. You give notice to end your membership and get back what you paid for your shares, less anything you owe the co-op.

Non-profit co-ops: applying and waiting

• Apply to each co-op. CHF BC doesn't take applications or manage waitlists. Its directory shows whether each co-op has homes available, is accepting applications or has paused them, and some co-ops have closed waitlists.
• Share purchase. The BC Law Institute says shares typically cost $500 to $5,000, and they are refunded when you leave, less anything you owe.
• Housing charges and income. Some members pay a charge based on income, usually about 30% of gross household income, and others pay close to market rates. Some co-ops set minimum incomes, and some have no subsidy available.
• Your rights. Members aren't tenants, so the Residential Tenancy Act doesn't apply to them. The Cooperative Association Act and the co-op's rules set out how a membership can end, and the Civil Resolution Tribunal handles some co-op disputes.

If you are comparing a co-op with renting or owning, see Rent or Buy?

Who to ask before you commit

• A lawyer or notary. Ask whether they handle co-op share purchases and will review the co-op's documents with you. I compare the two in Notary or Lawyer?
• A lender and an accountant. Confirm financing for that particular co-op before your offer, and ask how the FHSA, the Home Buyers' Plan and a later sale apply to your shares.
• The co-op. Ask the board or manager for the documents, the approval steps and any planned changes to monthly charges.

Questions buyers often ask me

Do I get title to my unit when I buy into a co-op?

No. The co-op or company holds the land and building, as owner or under a lease, and your name doesn't go on title. You own shares, and your right to live in the unit comes from your membership and your occupancy agreement with the co-op.

Can I use my FHSA to buy into an equity co-op?

Possibly. CRA treats a co-op share as a qualifying home when it entitles you to own, and gives you an equity interest in, a housing unit. A share that only gives you a right to tenancy doesn't qualify, so check with your accountant before you rely on it.

Do I pay property transfer tax when I buy co-op shares?

Usually not. The tax applies when a transfer is registered at the Land Title Office, and a share purchase normally leaves the title unchanged. Some arrangements, such as a registered lease over 30 years, can be taxable, so ask your lawyer or notary.

Can I rent out my co-op unit?

Only if the co-op's rules allow it. CHF BC's model occupancy agreement for non-profit co-ops makes the unit your principal residence and lets the directors decide, at their discretion, whether you may sublet. Equity co-ops set their own rules, so read them before you buy.

How do I get into a non-profit housing co-op?

Apply directly to each co-op that interests you; CHF BC's directory shows which are accepting applications. Once the board approves you, you buy your membership shares and agree to the co-op's rules and occupancy agreement. Some co-ops have subsidized units and some set minimum incomes.

Comparing your options? See the strata documents to read before buying a condo, read what strata bylaws can say about rentals, pets and age, or look at first-time home buyer programs in BC.

This article is general information, not legal or financial advice. The details come from the Cooperative Association Act, the Property Transfer Tax Act, the BC Law Institute, CHF BC, Clicklaw, Metro Vancouver, the Province of BC, the Canada Revenue Agency and a lender's published loan terms, and were current at the time of writing; each co-op's own rules and documents decide how it works. For CHF BC's directory of housing co-ops, see Find a Co-op.